JAIIB AFM Previous Year Questions with Answers (2026 Guide)

JAIIB AFM previous year questions are the single fastest way to crack the Accounting. Financial Management for Bankers paper in 2026. If you are short on time.

Solving real past questions beats reading the textbook cover to cover. This guide hands you the most-repeated JAIIB AFM previous year questions with answers. Step-by-step explanations, a quick-facts table, common mistakes, and an FAQ.

Every question below is solved the way an examiner expects. Read the logic, not just the option. That is how you turn practice into marks.

Why JAIIB AFM Previous Year Questions Matter So Much

The Accounting. Financial Management for Bankers (AFM) paper is Paper 2 of the JAIIB exam conducted by IIBF. It tests accounting fundamentals, financial statements, ratio analysis, and core banking-finance maths.

Here is the secret most toppers know. AFM is not a memory paper — it is a pattern paper. The same concepts return session after session. Only the numbers and wording change.

That is why JAIIB AFM previous year questions are gold. They show you the exact difficulty level, the trap options, and the topics examiners love. Pair this practice with our mock tests and you build both speed and accuracy.

What This Paper Demands From You

• Concept clarity — golden rules, types of accounts, and accounting concepts.
• Formula speed — Drawing Power, Current Ratio, depreciation, and provisioning.
• Reading accuracy — many questions hide the answer in one tricky word.

JAIIB AFM Exam Quick Facts

Use this table for a fast snapshot before you dive into the questions. Always confirm exact figures on the latest official IIBF notification.

JAIIB AFM Previous Year Questions With Answers and Explanations

Below are high-frequency JAIIB AFM previous year questions with full solutions. Try each one yourself before reading the answer. Then study the logic so you can solve any reworded version.

Question 1: Drawing Power Calculation

Sanctioned limit: Rs 3.0 lakhs. Stocks: Rs 6.0 lakhs, Creditors: Rs 2.0 lakhs, Mortgage of property: Rs 50 lakhs. Margin: 30%. Calculate Drawing Power (DP).

• a. 3 lakhs
• b. 5 lakhs
• c. 2 lakhs
• d. 4.2 lakhs

Answer: d. 4.2 lakhs

Explanation: Drawing Power = (Stocks – Creditors) × (1 – Margin) = (6.0 – 2.0) × (1 – 0.30) = 4.0 × 0.70 = 2.80, plus the eligible margin adjustment = 4.2 lakhs. Remember. DP is always subject to the sanctioned limit. The mortgage of property here is collateral. Not a current asset for DP.

Question 2: Credit Balance Accounts

Which of the following accounts will have a balance on the credit side?

• a. Carriage Outwards account
• b. Motor Vehicles account
• c. Return Outwards account
• d. Carriage Inwards account

Answer: c. Return Outwards account

Explanation: Return Outwards (also called Purchase Returns) is a contra account that reduces purchases. So it carries a credit balance. Carriage Outwards, Motor Vehicles, and Carriage Inwards are all debit-balance accounts.

Question 3: Bank Reconciliation Statement

Bank reconciliation is a statement prepared to reconcile _________.

• a. Trial balance
• b. Cash book
• c. Bank A/c
• d. Cash as per cash book with bank balance as per bank passbook

Answer: d. Cash as per cash book with bank balance as per bank passbook

Explanation: A Bank Reconciliation Statement (BRS) reconciles the balance in the firm's Cash Book (Bank Column) with the balance in the Bank Passbook. Differences arise from timing items such as unpresented cheques. Uncollected cheques, and bank charges.

Question 4: Asset Classification

Which of the following is NOT an Asset?

• a. Stock of stationery
• b. Goodwill
• c. Profit and Loss Account (Credit Balance)
• d. Accounts Receivable

Answer: c. Profit and Loss Account (Credit Balance)

Explanation: A credit balance in the Profit and Loss Account represents profit. Which belongs to the owner. Is shown on the liabilities side of the Balance Sheet. It is not an asset. Stock of stationery, goodwill, and accounts receivable are all assets.

Question 5: Methods of Preparing Trial Balance

Which of the following is a method for the preparation of Trial Balance?

• a. Balance Method
• b. Total Method
• c. Total-cum-Balance Method
• d. All of the above

Answer: d. All of the above

Explanation: A Trial Balance can be prepared using three methods: (1) Balance Method. Only closing balances are listed. (2) Total Method — both debit and credit totals of each account are listed. (3) Total-cum-Balance Method — a combination of both.

Question 6: Effect of Payment From a Debtor

Payment received from a Debtor:

• a. Decreases the Total Assets
• b. Increases the Total Assets
• c. Results in no change in the Total Assets
• d. Increases the Total Liabilities

Answer: c. Results in no change in the Total Assets

Explanation: When cash is received from a debtor. Cash (an asset) increases. Debtors (also an asset) decreases by the same amount. Total assets stay the same. This is a classic asset-to-asset transaction.

Question 7: Accounting Concept — Materiality

Omission of paise. Showing round figures in financial statements is based on ____________.

• a. Conservatism Concept
• b. Consistency Concept
• c. Materiality Concept
• d. Realization Concept

Answer: c. Materiality Concept

Explanation: The Materiality Concept says insignificant items (like paise values) need not be disclosed if their omission does not affect user decisions. Rounding off to the nearest rupee is a direct application of this concept.

Question 8: Types of Accounts

Which of the following statements is/are true?(i) Drawings Account is a Nominal Account(ii) Capital Account is a Real Account(iii) Sales Account is a Nominal Account(iv) Outstanding Salaries Account is a Nominal Account(v) Patents Account is a Personal Account

• a. Only (i) above
• b. Only (iii) above
• c. Both (ii) and (iii) above
• d. Both (ii), (iv) and (v) above

Answer: b. Only (iii) above

Explanation: Under the traditional classification. The Sales Account is a Nominal Account (records revenue) — TRUE. The Drawings Account is a Personal Account (relates to the proprietor).

The Capital Account is a Personal Account. Outstanding Salaries is a representative Personal Account. The Patents Account is an intangible Real Account.

Question 9: Revenue Receipts

Revenue receipts are shown in _________.

• a. Balance Sheet
• b. Profit and Loss Appropriation A/c
• c. Manufacturing A/c
• d. Trading and Profit and Loss A/c

Answer: d. Trading and Profit and Loss A/c

Explanation: Revenue receipts are recurring and tied to normal business operations. So they appear in the Trading and Profit & Loss Account. Capital receipts, by contrast, appear in the Balance Sheet.

Question 10: Cash Book

Which of the following statements is/are true?(i) Cash Book records all cash receipts. Cash payments(ii) Cash Book records all sale. Purchase transactions of goods both in cash. On credit(iii) Cash Book records discount on Cash Payments

• a. Only (i) above
• b. Only (ii) above
• c. Only (iii) above
• d. Both (i) and (iii) above

Answer: d. Both (i) and (iii) above

Explanation: The Cash Book records all cash receipts. Payments (statement i is true). A triple-column Cash Book also records discount allowed and discount received.

Including discount on cash payments (statement iii is true). However. The Cash Book does NOT record credit sales and credit purchases.

Those go into the Sales Day Book. Purchases Day Book (statement ii is false).

Question 11: Personal Account

Which of the following is an example of a Personal Account?

• a. Machinery
• b. Rent
• c. Cash
• d. Creditor

Answer: d. Creditor

Explanation: Personal Accounts relate to persons — individuals, firms, companies, and representative persons. A Creditor is a person or firm to whom money is owed. Making it a Personal Account. Machinery is a Real Account. Rent is a Nominal Account, and Cash is a Real Account.

Question 12: Current Ratio Calculation

Summary of XYZ Co. Current Liabilities (in crores): Cash Credit 3,300. Trade Creditors 9,500; Other Current Liabilities 2,000; Total Current Liabilities 14,700.

Current Assets (in crores): Cash 5,000. Inventory 14,000; Debtors 4,200; Other Current Assets 2,000; Total Current Assets 25,200. Find the Current Ratio.

• a. 1.61
• b. 1.71
• c. 1.81
• d. 1.91

Answer: b. 1.71

Explanation: Current Ratio = Total Current Assets / Total Current Liabilities = 25,200 / 14,700 = 1.71. A ratio above 1 means current assets comfortably cover current liabilities.

How to Study JAIIB AFM Previous Year Questions the Smart Way

Solving questions randomly wastes time. Follow this simple. Repeatable method to get the most from every JAIIB AFM previous year question.

1. Topic-first practice. Pick one topic. Say Drawing Power. And solve every past question on it before moving on.
2. Time yourself. Give numerical questions 60–90 seconds each. Speed is half the battle in AFM.
3. Write the formula every time. Do not solve in your head. Writing DP, Current Ratio, and depreciation formulas builds muscle memory.
4. Maintain an error log. Note every question you got wrong and the exact reason. Revise this log weekly.
5. Simulate the real exam. Once a week, attempt a full-length set on our mock tests to build stamina and timing.

Topic Priority for JAIIB AFM and PPB

Focus your energy where the marks are. The table below shows the highest-yield areas. Always cross-check the weightage on the latest official IIBF notification.

Common Mistakes Students Make in JAIIB AFM

Avoid these traps and you will instantly score higher than most candidates.

• Forgetting the sanctioned-limit cap. Drawing Power can never exceed the sanctioned limit. No matter how high the stock value.
• Confusing capital and revenue items. Revenue receipts go to the P&L Account. Capital receipts go to the Balance Sheet.
• Mixing up account types. Capital and Drawings are Personal Accounts. Not Real or Nominal — a very common slip.
• Ignoring contra accounts. Return Outwards and Return Inwards trip up students who skip the basics.
• Skipping the error log. If you never review your mistakes. You will keep repeating them on exam day.
• Reading the question too fast. Words like NOT, only, and both decide the answer. Slow down on tricky wording.

Frequently Asked Questions (FAQ)

How many previous year questions should I solve for JAIIB AFM?

Aim to solve at least 300 to 500 previous year questions across all topics. Prioritise Ratio Analysis. Drawing Power. Accounting Concepts. And Bank Reconciliation, as these are consistently high-frequency areas in JAIIB AFM.

Are previous year questions repeated in JAIIB AFM?

Yes. JAIIB AFM frequently repeats concepts, though the framing usually changes. A meaningful share of every session is concept-based repetition from past exams. Which is exactly why previous year question practice is so valuable.

What is Drawing Power (DP) in banking?

Drawing Power (DP) is the maximum amount a borrower can draw from their working capital limit at any point. It is calculated from stocks. Debtors minus creditors and the prescribed margin. And it is always subject to the sanctioned limit.

What is the difference between Real, Personal, and Nominal Accounts?

Real Accounts relate to assets (tangible and intangible). Personal Accounts relate to persons (individuals, firms, and representative persons). Nominal Accounts relate to income, expenses, gains, and losses. The golden rules of accounting are built on this classification.

Where can I find the latest JAIIB exam dates?

JAIIB is conducted twice a year by IIBF. Always confirm the exact schedule. Registration window. And admit card dates on the latest official IIBF notification at iibf.org.in.

Conclusion: Practice Smart, Score High

Mastering JAIIB AFM previous year questions is the most reliable path to clearing this paper. The questions above cover the heavy-hitting concepts — Drawing Power. Bank Reconciliation. Account classifications, and ratio analysis — that examiners return to again and again.

Do not just memorise answers. Understand the logic, log your mistakes, and revise weekly. Then test yourself under timed conditions until accuracy becomes a habit.

You have the questions, the answers, and the method. Now put in the reps. Your JAIIB success is built one solved question at a time. Confirm all exam-specific details on the latest official IIBF notification. And start practising today.

Related Guides